News Digest July 25-31

By Tom Curry, Margaret Emery, Christopher John Farley, Alexandra Lange, Erik Meers, Michael Quinn and Sophfronia Scott Gregory

NATION

Limping Toward a Budget

Democrats in the Senate and House stitched together a budget-plan compromise Friday evening -- with themselves. The party's conferees resolved most differences between the version passed earlier by the two chambers, but ended up fecklessly falling a bit short of the $500 billion deficit-reduction goal set by President Clinton. The key deal: limiting the gas-tax increase to 4.3 cents per gal. -- $33 per year for an average driver -- rather than the larger, broader energy tax that Clinton and the House Democrats had wanted. Republicans are expected to oppose the plan solidly, but Democratic leaders feel they can hold ranks and win narrow passage in the full House and Senate this week.

Clinton Rattles a Saber

Even as negotiators in Geneva called for a cease-fire and presented a new peace plan that would carve up Bosnia into ethnic ghettos, President Clinton raised the volume by threatening air strikes to protect not only U.N. forces but also civilians in besieged Sarajevo. European allies reacted coolly to the second part of the proposal, as they had to a similar U.S. plan in May. If the United Nations requests action, NATO planes could commence bombing runs early this week.

The Flood: No Relief in Sight

St. Louis, Missouri, is braced for the worst as it awaits a possible record crest of 49 ft. for the Mississippi River this week. City workers continued to patch up the 52-ft. floodwall protecting the city, but with yet more thunderstorms in the forecast, they are unsure if the structure will hold. Meanwhile, after a five-day partisan battle, the House approved a nearly $3 billion relief package. Republicans insisted that any outlay for relief be matched by spending cuts. At week's end the Senate Appropriations Committee voted unanimously for a $4.7 billion relief bill.

Gays Sue over Compromise

Six members of the military reserves and one Coast Guard medical corpsman sued the U.S. government on the ground that the services' treatment of homosexuals is unconstitutional. The suit comes in response to the compromise between the Clinton Administration and the Pentagon that allows gays and lesbians to remain in the military as long as they keep their sexual orientation private. The House Armed Services Committee voted 43 to 12 in favor of retaining the ban in some form, and Congress is considering whether to write the new regulations into law.

Clinton Nominees Approved

A number of the White House's nominees for important posts were approved by Senate committees, putting a halt to the seemingly endless stream of controversy over nominations that the Administration has endured. The Judiciary Committee voted 18 to 0 in favor of confirming Ruth Bader Ginsburg as a Justice of the Supreme Court. The Labor and Human Resources Committee gave a 13-to-4 endorsement to Dr. Joycelyn Elders to be Surgeon General. Louis Freeh, the nominee for fbi director, seems headed for quick approval this week.

L.A. Beating Trial

Jury selection began for the trial of two of the young men accused of beating truck driver Reginald Denny during the riots in Los Angeles last year. Damian Williams, 20, and Henry Watson, 28, were allegedly hitting and kicking Denny when they were captured on videotape by a news helicopter. The two men are charged with attempted murder and other felonies in the attack on Denny and seven other victims. Another defendant in the case, Antoine Miller, 21, is also charged with attempted murder, but will have a separate trial.

Altman Charges Dropped

A New York judge dismissed four of eight criminal charges against Robert Altman in connection with the B.C.C.I. bank scandal. The most serious charge, bribery, was among those dismissed, making it difficult for prosecutors to prove Altman's role in the fraud.

WORLD

Leveling Lebanon

In the fiercest attacks in more than a decade, Israeli warplanes and artillery rained fire on southern Lebanese villages in retaliation for rocket attacks by the pro-Iranian guerrillas of Hizballah. Israel agreed to a U.S.-brokered truce in the weeklong offensive only after Hizballah pledged to stop guerrilla raids. More than half a million refugees have fled the U.N.-controlled southern security zone in recent weeks. The U.S. rebuked all parties, including Israel and Syria, for slowing the peace process.

The Benefit of the Doubt

Meanwhile, citing "reasonable doubt," the Israeli Supreme Court overturned the conviction and death sentence of John Demjanjuk, the retired autoworker who for the past 16 years has denied that he was Ivan the Terrible, the operator of the gas chambers at the Treblinka concentration camp.

The New Era in Japan

Seven Japanese parties agreed to form a coalition government, which for the first time since 1955 would shut the Liberal Democrats out of power. The coalition, which includes socialists, conservatives, centrists and reformers, seems to have settled on Morihiro Hosokawa, founder 14 months ago of the Japan New Party, to be Prime Minister.

Euro-Unity Crisis

When Germany declined to lower interest rates, it threw the European Monetary System, the linchpin of European economic and political union, into chaos. In wild trading, the franc plummeted and gold soared.

BUSINESS

IBM Shrinks Again

IBM chairman Louis Gerstner, hoping to "get behind us this Chinese water torture we've been going through quarter after quarter," announced layoffs of 35,000 employees. The company posted an $8 billion loss for the second quarter and slashed its quarterly dividend from 54 cents to 25 cents.

Steel Tariffs Removed

To the chagrin of big U.S. steel companies, the U.S. International Trade Commission cleared foreign steel firms of most of the pending charges that they had engaged in unfair trade practices. As a result, most of the stiff tariffs on foreign steel imposed last month by the Commerce Department will be rescinded.

Merck's Big Purchase

Companies move with the times. With the public demanding more affordable medicine, Merck,which has dominated the premium-prescription-drug market, last week moved to acquire Medco, the nation's largest marketer of discount medications. The transaction will cost Merck, the world's largest drug firm, $6 billion. Analysts expect Merck's rivals to forge similar alliances with discount distributors.

MEDIA & THE ARTS

Murdoch's Pacific Interest

News Corp. sees a big future in the sky-sweeping satellite of STAR TV, a Hong Kong-based television network. Rupert Murdoch bought a majority interest in the company, which has a meager audience of 13 million -- but potentially STAR TV could reach 3 billion viewers, two-thirds of the world's population.

NBC Gets Olympics

For the third consecutive time, NBC will broadcast the Summer Olympics. The network won the right to the 1996 Games after making a record-setting bid of $456 million, $55 million more than the money-losing '92 Games, besting offers of $415 million from CBS and $450 million from ABC.

SCIENCE

Venus

Our closest planetary neighbor is about the same size as Earth; now it seems the two planets are sisters under the skin as well. After charting the locations of more than 1,600 volcanic structures on the planet, mapped in detail with radar by the Magellan orbiter, Brown University scientists say the volcanoes are clustered much as earthly ones are, implying that Venus may have a structure of a thin crust over molten rock that is similar to Earth's.

Plymouth Rock, South

After 60 years of determined searching, archaeologists last week announced that they have uncovered traces of the first permanent European settlement in the U.S.: a Spanish fort in St. Augustine, Florida. The remains of a moat and palisade date back to 1565 -- four decades before the English established Jamestown in Virginia and 55 years before the Pilgrims landed at Plymouth Rock.